Sheffield-born £300m tech tycoon David Richards: Why I'll NEVER work with Facebook

David Richards is fed up with his neighbours. Not the other multi-millionaires in his private community in California, but the Silicon Valley social media companies round the corner from the office of his own £300million tech company.

Naming Facebook as an example, the Sheffield-born tycoon says the social media giants are damaging society by using aggressive business practices and monopolising entire markets.

‘There has to be regulation that isn’t just about content,’ Richards explains over a drink at a hotel bar during a visit to London. ‘We all know that you shouldn’t have terrorists posting propaganda and you shouldn’t have images of self-harm or inappropriate sexual images.

‘But there has to be a proper investigation into the business models used by these companies, which are basically very complex advertising and influencing platforms.’

Pioneer: WANdisco boss David Richards in his Sheffield office

As a Silicon Valley mogul himself, it is an extraordinary attack. Richards is one of the few British entrepreneurs to have made a successful leap across the pond. He founded and runs AIM-listed WANdisco, which offers so-called cloud computing services and works with the likes of Amazon and Microsoft.

‘Cloud’ is the term for huge internet servers where big companies are now storing vast quantities of data for remote access.

Most entrepreneurs who rely on big US tech firms for business daren’t speak out. But Richards is only just getting started. ‘These companies are using very sophisticated techniques based on data analysis and artificial intelligence tools that are only really available to them and they’re making super-normal profits on the back of actually harming people – and I don’t think that’s a good thing,’ he says.

‘There are certain companies that I think are not good for society and I wouldn’t work with them.’

It is the first time Richards has spoken out against the social media giants since he moved to the San Francisco area during the dotcom boom. He is a serial entrepreneur, having run a string of software firms since the mid-1990s, including Druid, Insevo, and Librados.

He made money at all three, but less than hoped at Insevo when the dotcom bubble burst, before launching WANdisco in 2005. The company, jointly headquartered in Sheffield and California, floated in 2012 on AIM, London’s junior stock market, raising £15 million.

Apple tracks your every move unless you turn off location based services

Since then, the focus of the business has turned to the ‘cloud’. WANdisco’s technology allows major firms such as banks to continue to operate whilst data is being migrated to the cloud, which can take months, if not years.

He finds it frustrating that most people don’t understand how the tech behemoths have grown to infiltrate every aspect of our lives.

‘I say to people: ‘Do you know that Apple tracks your every move unless you turn off location-based services?’ I have people at dinner parties sat around saying: ‘Oh my god, I didn’t even know that’. These things should be turned off by default. You should be opting in, not opting out,’ he says, shaking his head.

He also hits back at claims by Apple and Amazon that they only listen to a small percentage of phone calls. ‘1 per cent of a trillion is a lot and people forget that. They could be listening to millions of conversations and probably are.’

One of the major criticisms levied at the tech giants has been the ‘killer’ strategy they use to squeeze rivals out of the market. A report commissioned by the UK Government found Apple, Google, Facebook, Amazon and Microsoft had gobbled up 400 smaller tech firms over the past decade.

Richards acknowledges that this predatory approach has helped the likes of Facebook – which now owns Instagram and WhatsApp – destroy the competitive forces that might ordinarily have forced them to clean up their acts. But he is convinced that the trend cannot last.

In short, he explains, the tech giants are trying to dominate markets in the same way that firms in other industries, such as telecoms giant AT&T or Standard Oil, have done in the past.

And he’s confident that, like AT&T and Standard Oil, that means they will eventually be cut down to size by regulators. ‘Monopolies happen and then get broken up,’ he says. ‘It’s happened in oil and telecommunications and it’s happened in tech over a number of years. If you can do it to Standard Oil you can do it to anyone.’

David Richards,48: Early rising, Globetrotting Fight Club fan

Lives: Diablo, California, in a private community with its own golf course.

Drives: A Bentley and a Jaguar XK8.

Family: Wife Jane, 49, and children Harry, 20, and Poppy, 19.

Favourite book: Measure What Matters by John Doerr – which is about the explosive growth of Amazon, Google and others. ‘I give it to all my employees.’

Favourite film: Fight Club, starring Brad Pitt.

Fight Club, starring Brad Pitt

Last holiday: The Antarctic. ‘I’ve now been to all seven continents, which is pretty cool.’

Average day: Wakes up at 5.50am and walks the dogs. ‘I start doing calls about 6.30-7am. I tend to be in the office most days.’

Richards also sees cloud computing playing a role in helping smaller technology firms grow into larger competitors. He describes it as ‘a massive innovation platform’ that has enabled a raft of new, ground-breaking companies to be born.

‘Uber, Lyft, Airbnb, all of this new brand of company that is based around software interface – I don’t think they would have happened if it weren’t for cloud,’ he says.

His reign at WANdisco has been an unusual one. In 2013, it hit a £1billion valuation before a slump that led to Richards being ousted from the company in 2016. He returned just a week later with the backing of US investors and booted out the chairman, ex-Sage boss Paul Walker, who had orchestrated the coup.

The shares now are five times higher than during his brief exile and he has struck deals with Microsoft and Alibaba, China’s answer to Amazon. After instigating changes on his return, Richards says he is now seeing the ‘first green shoots’ of his masterplan, adding: ‘There’s going to be a stampede now over the next 20 years to cloud.’

Richards has struck deals with Microsoft and Alibaba, China’s answer to Amazon

However, he has concerns over where companies keep their data after Brexit. Under GDPR (General Data Protection Regulation), firms must store data on EU customers in the EU, meaning big firms could shift data centres and jobs away from Britain to Europe. ‘It is a train wreck waiting to happen,’ Richards says.

He says another unintended consequence of allowing social media firms to dominate markets without proper competition or regulation will be the financial cost to society.

For example, Richards thinks dealing with mental health issues from social media addiction is going to hit the NHS hard. The problem has become a major focus of the David and Jane Richards Family Foundation, the charity he set up with his wife to help improve the lives of children.

‘I don’t think Britain can afford it. I think it’s going to get worse and worse and worse.’ He goes as far as saying the tech giants are becoming ‘the new Big Tobacco’ and should pick up the bill.

‘My grandfather used to tell me how they’d go and buy cigarettes at just eight years old because nobody knew what the dangers were in the 1930s,’ he recalls. ‘But when the science was finally believed, then regulation happened. I think mobile phones can be really good because you can find anything out anytime you want.

‘Unfortunately there are also things that are super dangerous and there are no health warnings. These companies can’t be trusted.’

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